Has wind power finally come of age?

With the Government demanding that renewable energy sources generate 10% of the UK's power by 2010 and 20% by 2020 (from their current 3%), and even George Bush beginning to sound keen on the idea, there is more interest in renewable power generation than ever before, says Angus McCrone in The Sunday Times.

Not everyone is convinced it can really take off (the Royal Academy of Engineering pointed out in 2004, for example, that while gas-fired electricity generation costs a mere 2.3p/kWh in March 2004, onshore wind generation came in at 3.7p). But when it comes to wind power, a lot depends on the site and reliability of the wind.

Indeed, according to Robin Batchelor, manager of the Merrill Lynch New Energy Technology trust, wind power in "appropriate" locations is already competitive with fossil fuels and, says Raymond Greaves at Collins Stewart, "if windfarm operators select their sites well, they could make an internal rate of return of 15% or more, thanks to local subsidies and carbon-certificate trading".

So how do investors get into the sector? One way, says Investors Chronicle, is via Renewable Energy Holdings (AIM:REH, 61p). Based in the Isle of Man, the firm floated a year ago at 50p and is headed by John Baker (ex-National Power) and Mike Proffitt (who previously restructured the island's Electricity Authority). To date, it is less than half way to producing its target of 100MW within 12 months, but should do so shortly through "an imminent deal" in Germany. Once completed, this will cover the group's overheads, "so profits from further projects drop straight to the bottom line".

There's always the risk of the need to raise more funds, but the company "has strategic alliances with the likes of Boeing and Standard Chartered". And it isn't restricted to wind projects it also owns a wave-energy subsidiary and rights to a methane project in Wales. "Access to a strong pipeline and a strong management team bode well," says Investors Chronicle. "Buy."